Affinity Plus FCU Regroups, Slows Growth With New CEO

When Dave Larson was named the interim president/CEO of Affinity Plus Federal Credit Union shortly after Kyle Markland suddenly resigned on Aug. 28, he could not have predicted what the reaction would be.

“The response that I've received from the management team, employees, board, vendors, partners and regulators has really been extraordinary,” Larson said. “It's almost been overwhelming, in a good way.”

After three months of guiding the $1.7 billion Affinity Plus in St. Paul, Minn., Larson was named the permanent president/CEO Nov. 21. He has been with the credit union since 2002, last serving in the position of senior vice president. Larson is also the executive director of the Affinity Plus Foundation and serves on the board of the Minnesota Credit Union Foundation.

Larson's new role comes after Markland, who served as president/CEO of the credit union since 1997, abruptly resigned in late August. Affinity Plus said Markland's departure was prompted by empty nest syndrome after his second child, a son, recently left for college. Markland was named Credit Union Times’ 2012 Trailblazer CEO of the Year.

To let Affinity Plus’ members know about the changes, Larson sent out a letter to those members who receive emails.

“I got over 200 responses. Typically, we might get four or five,” Larson said. “And not all were raving fans. Some said ‘you need a branch in my community.’ We got some of that. I didn’t hear a lot of concerns (about the change in leadership). They were pleased to know that we looked internally.”

Nearly a month in at the helm, one of the first discussions Larson had with Affinity Plus’ board of directors was the need to slow down growth at the credit union.

“I’m not saying we’re going to turn people away,” Larson explained. “I believe there has been some stress put on our service levels. We’re going to put the pause on growth plans.”

In Affinity Plus’ 2013 Fall Member Focus newsletter, Larson wrote the credit union was a healthy and financially strong organization. At the time of Markland's resignation, Affinity Plus reported a 0.57% return on assets as of June 30, according to its financial performance reports posted on the NCUA website. In the third quarter, return on assets dropped to 0.25%. Comparatively, in June 2012, the credit union reported 1.45% ROA.

Affinity Plus’ third quarter financials revealed a number of financial management strategy shifts that resulted in a 55.1% annualized drop in net income as of Sept. 30. Net income dropped from $4.6 million as of June 30 to $3.1 million during as of Sept. 30. The credit union also experienced a 12.7% increase in provision for loan and lease losses after delinquent loans increased 23.5% to $16.5 million in the third quarter.

Chartered in 1930 as State Capitol Credit Union to serve those working in St. Paul, the cooperative changed its name to Affinity Plus Federal Credit Union in 1998 to better reflect its broader service area, according to its website. It now has 25 branches throughout Minnesota and serves more than 180,000 members.

Larson said part of the pullback on growth means Affinity Plus’ successful “Ditch Your Bank” campaign, which started well before Bank Transfer Day in November 2011, will be scaled back in 2014.

“That's not to say that it will be dead forever,” Larson noted about the effort to woo frustrated bank customers to the credit union.

Instead, more attention will shift back to the total member experience. Larson said some employees were bogged down with back office functions that were taking time away from working with members.

“We had become a very decentralized organization, which is a unique model not only for credit unions but other financial institutions,” Larson explained. “We have this gift to work with people that we truly care about – their lives, hopes, dreams and their communities. I believe most businesses don’t see their customers, or in our case, the members, that way. We have this incredible opportunity to connect with them.”

Since joining Affinity Plus, Larson “has exemplified a dedication to the organization and its employees that is unique in today's business culture, said Connie M. Roehrich, Affinity Plus board chair.

“He is committed to a member-first philosophy that the board values and respects, and when combined with his track record of integrity, transparency, and ability to communicate clearly, Dave is the best candidate to lead Affinity Plus into the future,” Roehrich said.

Another area that will see changes is within Affinity Plus’ real estate division, Larson said. The bulk of the work was being processed in the credit union's branches and call centers. Because real estate has many moving parts, Larson said the process can be overwhelming to frontline employees. So much so, that processing mortgage loans took over their focus, he added.

“We want to centralize real estate. Over the last couple of years, we've done a lot to help with mortgages but we have a lot more to offer,” Larson said. “If we can take more off (the frontline employees’) plates, it will allow them to spend more time with the members.”

In addition to having the support of Affinity Plus’ board of directors with the credit union's members first approach, Larson said he's also made some key changes within his management team. His first act as the new president/CEO was naming Brian Volkmann the permanent chief financial officer after he served in an interim role for nearly 11 months. Bill Urick, who served as CFO before Volkmann took over, left Affinity Plus in January. Larson brought him back on board to become the credit union's chief operating officer. In July, Sarah Olson was also hired as senior vice president of human resources.

While the past few months as interim president/CEO of Affinity Plus has allowed Larson to get a wider view of the credit union's operations, he said he felt confident about the transition since he's worn several titles over his 12 years of service here.

“One of the benefits of my role is I worked in other roles. I know these leaders, they know me, they know what to expect,” said Larson, who has worked with credit union for more than 20 years. “The leadership team that we have is extraordinary.”